Hurray for the Pension Benefit Guaranty Corp., the federal pension insurance agency that protects consumers from losing their corporate pensions. The PBGC isn't rolling over and accepting bankrupt American Airline's move to dump its pension obligations on the PBGC.
Instead, the PBGC filed liens today against American Airlines after the airline failed to make all but $6.5 million of the $100 million pension payment it agreed to make in January as part of the November bankruptcy filing.
PBGC spokesperson Jioni Palmer said, "American is sitting on a pile of cash $4 billion high. By failing to make its required pension payments, it is threatening the retirement security of 130,000 families."
The PBGC says that American has $18.5 billion in pension liabilities and only $8.3 billion in assets set aside to pay them. American has claimed that it needs to eliminate its obligation to pay employee pensions in order to be competitive with other major airlines.
PBGC Director Josh Gotbaum responded in a statement that the company has a lower per worker pension obligation than Delta Airlines, which also reorganized in bankruptcy, and should meet its obligations: "We stand with American's workers and retirees who are concerned about their futures. Many of the airline's employees took lower wages so the plans could continue. Now, it's American's turn to step up so workers aren't short-changed."
The mood of the moment in many quarters is to cut pension obligations however possible. WealthTrace.com retirement analyst Doug Carey suggested in his blog post today that people younger than 50 should assume in their retirement planning that they'll get at least 15 percent less than they've been promised -- whether they are owed a private pension or Social Security.
That's a disturbing thought. Let's hope it's wrong, but save that extra 15 percent anyway.